Many of us have stuck with the same current account for years – or even decades – even though we could save hundreds of pounds by choosing a better bank.
People often stay put due to the perceived hassle of switching, yet moving to a new provider is now a very simple and smooth process. Once you’ve opened an account, the new bank does the rest – and everything should be wrapped up in seven working days.
This is thanks to the Current Account Switch Service (CASS) which closes your old account and automatically transfers all your direct debits and standing orders to a new account for you.
The CASS also comes with a raft of guarantees to reassure customers they won’t lose out if something goes wrong.
Spoilt for choice?
When it comes to current accounts, there are now a whole host of providers – including a number of newer, so-called ‘challenger banks’ – alongside the traditional high-street names.
While choice is a good thing, it can make it harder to know to go about choosing the best current account.
So here are some things to look out for.
Does it have a decent rate of interest?
If you tend to keep a healthy balance in your current account, the key is to look for one paying high interest.
In fact, certain current accounts will now beat the rates paid on some savings accounts.
But make sure you read the Ts and Cs, as there may be specific monthly funding requirements to get the high rates of interest, or you may have to pay a monthly fee for the account.
Also be aware that in some cases, the high rate will only be paid on balances up to a certain level, and that in others, it will drop away after a set period of time – often after just 12 months.
Make sure you understand exactly how the account works before signing up.
Does it offer rewards?
If you have lots of bills and other outgoings leaving your account each month via direct debit – and stay in credit – it’s worth seeking out an account offering cashback or a monetary reward when you spend.
This type of account can work particularly well for families who pay multiple bills.
Once again, be sure to scour the small print, as some accounts will require you to have a certain number of direct debits going out to qualify for the cashback or reward, while others will have a minimum monthly funding requirement.
Some accounts will levy a monthly fee – so make sure you do the maths to ensure the amount you are making in ‘rewards’ over a year beats the amount you are paying in fees. If it doesn’t, you may be better suited to a different type of account.
Does it have switching incentives?
A number of banks will offer juicy incentives – of as much as £100 – to try and persuade you to move your custom.
While such offerings can sound very appealing, be aware that not all incentives will be paid as cash bonuses. Some will offer gifts cards which can only be spent with certain retailers.
And crucially, don’t get seduced by free monetary bonuses, points or rewards without checking the account is right for your needs.
Does it have a competitive overdraft?
If you spend a lot of time in the red, you need to find the current account with the cheapest overdraft offering.
Shop around for an account with an interest-free limit or buffer, coupled with a low rate of interest.
Also note that from April 2020, the banking regulator has ordered that all banks charge simple overdraft interest rates – so this should make life easier when it comes to comparing accounts.
Are there linked savings accounts?
If you are good at squirreling money away, or looking to get into the savings habit, you might want to seek out a current account with a linked saving account. This might, for example, be an exclusive regular saver paying a preferential rate of interest.
But check the terms, as you may only get this rate if you save a certain amount each month by standing order.
Does the bank have good service?
Don’t forget that one of the most important features of a current account is good customer service. Certain banks consistently win plaudits for the way they treat customers, while others feature all-too-frequently in a rogues’ gallery of most-complained about financial companies.
Do your research, and find a bank that prides itself on treating customers well.
Want more information?
For more information about the Current Account Switch Service, visit Currentaccountswitch.co.uk
Find out more about our new Saga Saving accounts provided by Goldman Sachs International Bank.